Taking care of those you care for

Jenny’s father Jack died suddenly after suffering a heart attack. A couple of weeks passed before she was able to bring herself to go to his home to look through his possessions. She was surprised by the amount of mail that had accumulated in such a short period of time. Among the many items were hospital and other medical bills, several bank statements, a utility and credit card bill and a letter from an insurance company.

In the nightstand next to her father’s bed, Jenny located two check books and a savings pass book. She also located his most recent retirement check, which had not yet been deposited into his checking account. She found the deed to the house along with an insurance policy and some other miscellaneous papers in a lock box. Her brother Jake suggested that she look to see if there was a will. Jenny looked throughout the home, but could not find one.

Jake lived out of state so it was left to Jenny to take care of her father’s affairs. She gathered the documents that she located at the house, and made an appointment to see an attorney. At the consultation, the lawyer explained to Jenny that they would need to open an estate with the probate court. The estate would be “intestate” meaning that her father had died without a will. Under Ohio law, since Jenny’s mother predeceased her father, and he died without leaving a spouse, she and her brother would equally share her father’s assets. Jenny was relieved to hear this since that was what she and her brother desired. However, that was where the good news stopped.

Since Jack had no will the court would have to appoint an administrator. Typically in a will the testator, the person making the will, nominates an executor to take care of his affairs following his death. The will would then provide that the executor would serve without having to post a bond. However, since there is no will, and Jenny is not entitled to the entire net proceeds of the estate (her brother being entitled to one-half) she must post a bond in order to be named administrator.

Jenny showed the lawyer the deed to her father’s home. The property was held in the name of Jenny’s mother and father. Unfortunately, when her mother passed the real estate was not transferred into Jack’s sole name. Therefore, the property would have to be transferred to Jack’s estate before being deeded to Jenny and Jake. Had Jack taken care of this matter at the time of his wife’s death, he might have then placed the property in survivorship form with his two children. This would have caused the real estate to pass to them upon his death. Instead, it is now a part of the probate estate and must go through the probate court before it can be transferred to the children. This means, amongst other things, that an appraisal may have to be done of the property, and the attorney’s fees will be greater. Jenny and Jakes plans to immediately place the property for sale will have to be delayed for at least several months or more.

Jack’s checking accounts and savings account totaled about $45,000.00. The accounts were all in Jack’s sole name. He could have set up the accounts so that they were “pay on death” or “transfer on death” to one or both of his children. This again would have removed them from the probate estate, reduced the attorney fees, and given his children immediate access to the funds.

When Jack passed away, Jenny and Jake paid nearly $10,000.00 for his funeral out of their own pockets. There was a $25,000.00 life insurance policy, but the deceased mother was still listed as the beneficiary. Eventually, Jenny and Jake would receive the proceeds, but more time and paperwork would delay this process nearly six months. Even more unfortunate was the fact that Jack had another insurance policy worth $100,000. Jack never told his children about this policy and Jenny never found it tucked away in a tattered folder.

Jack loved his children with all his heart. He was a hard working father who did everything that he could for them during his lifetime. However, he could have done much more for them upon his passing if he had simply taken care of a few fairly simple matters.

He could have had a will drafted for a modest amount of money. When his wife passed away, he could have had their real estate transferred into his name, and perhaps placed it in survivorship form with his children. He could have named the children as alternate beneficiaries on the life insurance policy. Jack could have had his financial accounts set up as pay on death to Jenny and Jake. Finally, he could have made a written list of all of his assets including where they could be located (such as the lost life insurance policy) and given copies of the list to his children or at least informed them where to find the list upon his death.

You do not have to be a millionaire to have an estate plan. Even if you are of modest means, some simple planning and organization, as well as communication, may save your family, that you love so much, a great deal of heartache and money.

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